Baker v. Bailey

782 P.2d 1286 (1989)

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Nature of the Case

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Facts

D moved a mobile home onto property owned by their daughter and son-in-law. D hooked onto the water line which serviced their daughter's home and installed a pipeline which would provide water for their trailer. The daughter and son-in-law made the decision to sell their residence and the surrounding property. They transferred one acre of the property to D. This one acre surrounded the mobile home. The remaining property, consisting of forty-five acres, was sold to P. A Water Well Use Agreement was prepared. P was concerned about future ownership of the one-acre plot with respect to undesirable neighbors. The well agreement specifically provided that the right to use water would only extend to D. In the event D conveyed the property, P was under no obligation to provide the new owners with water. D believed that although not specifically set forth, P would transfer the right to use the water well to a subsequent 'reasonable purchaser' of the property. The language of the agreement did not reflect this concern. P also received a right of first refusal within 15 days in the event D received an offer on the property. D decided to sell. D represented that the property would be sold with 'shared well water.' Based upon the realtor's valuation of the property with water, it was listed for $47,500.00. Just as suddenly as the listing went up, the water system developed problems. D was unable to obtain sufficient water to meet their needs. P always had sufficient water. P had enough water to irrigate their lawn. After the problems with the water well surfaced, P informed D that they would not share the water supply with any new purchaser. D tried to bargain with P or find other sources but to no avail. The property was now worth $8,000. D agreed to a sale at that price, and P exercised its option. P filed a lawsuit to recover for the value of a refrigerator, and certain unpaid expenses which they felt were owed by the D. D counterclaimed and sought damages for breach of the Water Well Use Agreement. The court found P in breach of the agreement and breach of the implied covenant of good faith and fair dealing. P appealed.